Winston Peters likely to win battle to keep pension age at 65

Monday, 16 October 2023

Winston Peters may be able to block National and ACT’s plan to lift the pension age to 67.

National and ACT may be prevented from hiking the age at which people qualify for NZ Super from 65 to 67, if they need to strike a coalition deal with NZ First.

National and ACT pledged to lift the age at which people qualify for the universal state pension, claiming it was the fiscally responsible thing to do as the population aged.

NZ First took a strong NZ Super pledge into the election, leaving no room for a policy trade-off in coalition talks. “The age of retirement will remain at 65 years. No ifs, buts, or maybes,” the party said.

Political analyst Neale Jones from CapitalNZ, who was chief of staff to former Labour leader Jacinda Ardern, said it looked likely National and ACT would need NZ First leader Winston Peters to form a government, and part of the price they would be willing to pay was delaying their plans for NZ Super reform.

“I think if NZ First holds the balance of power, I’m pretty sure he will say, ‘I’m not moving on that’,” said Jones.

National and ACT would probably have to swallow that, according to Neale, and in the short term, shelving NZ Super reform would not have any impact on their other policy priorities, including tax cuts.

Retirement Commissioner Jane Wrightson says the age at which people qualify for NZ Super should stay at 65. (Video first screened in November, 2022.)

On the current count, National and ACT have a combined 61 seats, but that is unlikely to be enough for a majority, as a lot of special votes are yet to be counted, with the final deadline for counting set at November 4.

Special votes tend to favour the left, Neale said, and then on November 25, the Port Waikato by-election will be fought.

Peters has been approached for comment.

Right-wing parties want to lift the pension age because the cost is rising as the population ages, forecast to go from $18.931 billion in the 2022/2023 financial year to just over $53b in 2042/2043, though the cost is relatively low compared with some other OECD countries.

But Labour, the Green Party, and NZ First remain opposed to the pension age changing. Te Pāti Māori wanted NZ Super paid to Māori at an earlier age, as the average life expectancy of Māori is lower, though the gap has been narrowing.

National would not start changing the pension age until 2044, whereas ACT would increase the NZ Super age to 67 at a rate of three months per year, starting from the 2024/2025 financial year. After that, ACT would index it to life expectancy.

Westpac chief economist Kelly Eckold was also picking National and ACT having to do a deal with NZ First, resulting in a “low probability” of changes to NZ Super.

Prime minister-elect Christopher Luxon looks likely to have to do a deal with Winston Peters. It looks likely that the deal will include leaving the pension age untouched.

That would be a tragedy averted for pensions researcher Clare Dale from the University of Auckland Waipapa Taumata Rau.

Lifting the pension age would be “awful” for people at the lower end of the economic picking order, including a disproportionate number of Māori and Pacific people, she said.

Dale would rather see the pension age left as it is, and lift the top tax rate to pay for it.

Current retirement commissioner Jane Wrightson also opposed an increase in the pension age, saying last year: “Any increase to the age of people accessing NZ Super will only further disadvantage women, Māori, and Pacific People.”

David Boyle from Mint Asset Management said National had been promising to lift the pension age since 2015.

Leaving the pension age unchanged would also mean no discussion would be needed about whether to also lift the age at which people could get their NZ Super, which is currently 65.